Indicator of the Week: The 20 Best (and Worst) Stocks to Own Until April

The S&P 500 Index (SPX) has historically outperformed during the six-month period between November and April

Senior Quantitative Analyst
Oct 26, 2016 at 6:11 AM
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Stocks have stalled some over the past few months. The S&P 500 Index (SPX) has been fairly flat since early July. The good news is that the most bullish six-month period is coming right up. This week I'll take look at the November-through-April period for stocks, and compare it to the other six months of the year (May through October). I'll also show some individual stocks that have historically been especially bullish over the upcoming six-month period.

The Upcoming Six Months: Over the past 50 years, the SPX has averaged a gain of 6.58% and has been positive 76% of the time, during the six-month period from November through April. This significantly outperforms the May through October period, which has averaged a gain of just over 1%, positive 64% of the time. The table below summarizes the returns over the past 50 years for each of these six-month periods. The average positive return of about 11% in the upcoming period stands out as especially bullish. Also notable is that, since 2009, six of the last seven November through April periods have given a positive return. The only negative result was last year, when the SPX lost less than 1% over the six months.

SPX Last 50 Years Oct 25

Here is a chart showing the average path of the returns during each six-month period. I think it really emphasizes the outperformance. The May-through-October returns basically bounce around the positive 1% level. The November-through-April period, meanwhile, shows a steady uptrend throughout the period. 

SPX May through Oct Nov through Apr Oct 25

Individual Stocks: Finally, below are a couple of tables showing individual stocks that have the biggest discrepancies between their May-through-October returns and November-through-April returns. I looked at SPX stocks over the past 10 years. The relative strength column represents the November-through-April returns relative to the May-through-October returns. 

The first table shows the 20 stocks that have performed best from November through April compared to how they performed from May through October. These are the stocks with the highest relative strength. The second table below are the worst stocks, or the stocks with the lowest relative strength. 

Best Stocks Nov Through Apr Oct 25

Worst Stocks Nov Through Apr Oct 25

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